M/s. Ahmedabad Strips Pvt.Ltd., Ahmedabad V. The ACIT, Ahmedabad Circle-1, Ahmedabad

CO 64/AHD/2011

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 9514 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 8 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 29-04-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 22-04-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 21-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJ MEHRA SRDR
• Assessee Lawyers: N C AMIN AR
• Keywords: Depreciation; Opportunity of being heard; Additional depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH AHMEDABAD , , , , BEFORE SHRI KUL BHARAT , JUDICIAL MEMBER AND , SHRI T.R. MEENA, ACCOUNTANT MEMBER .. , !' ! # $ ! # $ ! # $ ! # $ ITA NO. 474/AHD/2011 ASSESSMENT YEAR : 2007-08 ACIT, CIRCLE-1, 3 RD FLOOR, JITENDRA CHAMBERS, RBI LANE, ASHRAM ROAD, AHMEDABAD V/S . M/S. AHMADABAD STRIPS PVT. LTD. B-25, GHANSHYAM AVENUE, 3 RD FLOOR, NR. SAMRUDDHI, NAVJIVAN, AHMADABAD. PAN NO. A A BCA8222A (APPELLANT) .. (RESPONDENT) C.O. NO. 64/AHD/2011 ASSESSMENT YEAR : 2007-08 M/S. AHMADABAD STRIPS PVT. LTD. 604, SARAP, OPP: NAVJIVAN PRESS, OFF ASHRAM ROAD, AHMADABAD-380014. V/S . ACIT, CIRCLE-1, 3 RD FLOOR, JITENDRA CHAMBERS, RBI LANE, ASHRAM ROAD, AHMEDABAD (APPELLANT) .. (RESPONDENT) % & ' ! / BY REVENUE SHRI RAJ MEHRA, SR. D.R. ! & ' ! / BY ASSESSEE SHRI N. C. AMIN, A.R. () & ' /DATE OF HEARING 22.04.2014 *+, & ' /DATE OF PRONOUNCEMENT 29.04.2014 O R D E R PER : SHRI T.R.MEENA, ACCOUNTANT MEMBER THIS APPEAL AT THE BEHEST OF REVENUE AND C.O. AT TH E BEHEST OF ASSESSEE FILED, WHICH HAVE EMANATED FROM THE ORDERS OF CIT(A)-VI, AHMEDABAD, DATED 03.01.2011 FOR A.Y. 2007-08. BOT H WERE HEARD ITA NO. 474/AHD/2011 & C.O. NO. 64/AHD/2011 A.Y. 2007-08 ACIT VS. M/S AHMADABAD STRIPS PVT. LTD . PAGE 2 TOGETHER AND ARE BEING DISPOSED OF BY WAY OF THIS C OMMON ORDER FOR THE SAKE OF CONVENIENCE. REVENUES APPEAL IS AGAINST ALLOWI NG THE ADDITIONAL DEPRECIATION OF RS.34,97,760/- ON WIND MILL FOR GEN ERATION OF POWER AND ELECTRICITY WHICH IS NEITHER MANUFACTURE OR PRODUCT ION OF ANY ARTICLE OR THING AS CONTEMPLATED U/S. 32(1)(IIA) OF THE ACT. THE ASSES SEES C.O. IS IN SUPPORT OF THE REVENUES APPEAL. 2. THE ASSESSEE HAS CLAIMED ADDITIONAL DEPRECIATION OF RS.34,97,760/- ON WIND MILL. THE A.O. GAVE REASONABLE OPPORTUNITY OF BEING HEARD ON THIS ISSUE. AFTER CONSIDERING THE ASSESSEES REPLY AND HONBLE SUPREME COURT DECISION IN CASE OF CIT VS. N. C. BUDHARAJA & ANR 204 ITR 412 THAT THE ASSESSEE WAS NOT MANUFACTURING OR PRODUCING ANY ARTICLE OR THING AS ELECTRICITY POWER CANNOT BE CONSIDERED AS MOVABLE ARTICLE OR THING. ACCORDINGL Y, IT IS NOT ELIGIBLE FOR ADDITIONAL DEPRECIATION. HE FURTHER RELIED IN CASE OF TAMIL NADU CHLORATES VS. JCIT 98 TTJ 1 (CHENNAI). THUS, HE MADE ADDITION OF RS.34,97,760/-. 3. BEING AGGRIEVED BY THE ORDER OF THE A.O., THE AS SESSEE CARRIED THE MATTER BEFORE THE CIT(A) WHO HAD ALLOWED THE ASSESS EES APPEAL BY FOLLOWING VARIOUS DECISIONS: I. CIT VS. HI TECH ARAI LTD. (2010) 321 ITR 477 (MA D) II. CIT VS. VTM LTD. (2009) 319 ITR 336 (MAD) III. CIT VS. TEXMO PRECISION CASTINGS (2010) 321 IT R 481 (MAD) AFTER ANALYZING THE ABOVE CASE LAWS, HE HELD THAT A DDITIONAL DEPRECIATION ON COST OF WIND MILL ACQUIRED IS ALLOWABLE. ITA NO. 474/AHD/2011 & C.O. NO. 64/AHD/2011 A.Y. 2007-08 ACIT VS. M/S AHMADABAD STRIPS PVT. LTD . PAGE 3 4. NOW THE REVENUE IS BEFORE US. LD. SR. D.R. SUP PORTED THE ORDER OF THE A.O. HOWEVER, LD. A.R. FOR THE ASSESSEE HAS REITER ATED THE SAME ARGUMENT MADE BEFORE LD. CIT(A) AND AGAIN RELIED UPON THE SA ME CASE LAWS, WHICH HAVE BEEN RELIED BEFORE THE CIT(A) AND REQUESTED TO CONF IRM THE ORDER OF THE CIT(A). 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. THE LD. A.O. HAD NOT DOUBTED THE GENUINENE SS OF THE ADDITION MADE IN THE BLOCK OF ASSETS DISCLOSED IN THE BALANCE SHEET. THE LD. CIT(A) HAD CATEGORICALLY GIVEN FINDINGS ON ALL CONDITIONS LAID DOWN U/S. 32(1)(IIA) OF THE IT ACT. THE HONBLE MADRAS HIGH COURT IN CASE OF CIT VS. HI TECH ARAI LTD. (SUPRA) HELD AS UNDER: IT IS TRUE THAT THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURE OF OIL SEEDS, MOULDED RUBBER PARTS, REE D VALUE ASSEMBLIES APART FROM GENERATION OF POWER. AFTER THE INSTALLA TION OF THE ADDITIONAL WIND MILLS, BOTH PRIOR TO AS WELL AS AFTER THE INSTALLAT ION OF THE ADDITIONAL WIND MILLS, THE ASSESSEE WAS USING WIND ENERGY FOR GENER ATING POWER FOR ITS CAPTIVE CONSUMPTION APART FROM SELLING THE SURPLUS POWER GENERATED TO THE TAMIL NADU ELECTRICITY BOARD. AS FAR AS APPLICATION OF S. 32(1)(IIA) IS CONCERNED, WHAT IS REQUIRED TO BE SATISFIED IN ORDE R TO CLAIM THE ADDITIONAL DEPRECIATION IS THAT THE SETTING UP OF A NEW MACHIN ERY OR PLANT SHOULD HAVE BEEN ACQUIRED AND INSTALLED AFTER 31 ST MARCH, 2002 BY AN ASSESSEE, WHO WAS ALREADY ENGAGED IN THE BUSINESS OF MANUFACTURE OR PRODUCTION OF ANY ARTICLE OR THING. THE SAID PROVISION DOES NOT STAT E THAT THE SETTING UP OF A NEW MACHINERY OR PLANT, WHICH WAS ACQUIRED AND INST ALLED UPTO 31 ST MARCH, 2002 SHOULD HAVE ANY OPERATIONAL CONNECTIVITY TO TH E ARTICLE OR THING THAT WAS ALREADY BEING MANUFACTURED BY THE ASSESSEE. THE REFORE, THE CONTENTION THAT THE SETTING UP OF A WIND MILL HAS N OTHING TO DO WITH THE INDUSTRY, NAMELY, MANUFACTURE OF OIL SEEDS ETC. IS TOTALLY NOT GERMANE TO ITA NO. 474/AHD/2011 & C.O. NO. 64/AHD/2011 A.Y. 2007-08 ACIT VS. M/S AHMADABAD STRIPS PVT. LTD . PAGE 4 THE SPECIFIC PROVISION CONTAINED IN S. 32(1)(IIA). THE ASSESSEE WAS THEREFORE RIGHTLY ALLOWED ADDITIONAL DEPRECIATION. THE HONBLE MADRAS HIGH COURT IN CASE OF CIT VS. V TM LTD. (SUPRA) HELD AS UNDER: IT IS TRUE THAT THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURE OF TEXTILE GOODS. AS FAR AS APPLICATIO N OF S. 32(1)(IIA) IS CONCERNED, WHAT IS REQUIRED TO BE SATISFIED IN ORDE R TO CLAIM THE ADDITIONAL DEPRECIATION IS THAT THE SETTING UP OF A NEW MACHIN ERY OR PLANT SHOULD HAVE BEEN ACQUIRED AND INSTALLED AFTER 31 ST MARCH, 2002 BY AN ASSESSEE, WHO WAS ALREADY ENGAGED IN THE BUSINESS OF MANUFACTURE OR PRODUCTION OF ANY ARTICLE OR THING. THE SAID PROVISION DOES NOT STAT E THAT THE SETTING UP OF A NEW MACHINERY OR PLANT, WHICH WAS ACQUIRED AND INST ALLED UPTO 31 ST MARCH, 2002 SHOULD HAVE ANY OPERATIONAL CONNECTIVITY TO TH E ARTICLE OR THING THAT WAS ALREADY BEING MANUFACTURED BY THE ASSESSEE. THE REFORE, THE CONTENTION THAT THE SETTING UP OF A WIND MILL HAS N OTHING TO DO WITH THE INDUSTRY, NAMELY, MANUFACTURE OF OIL SEEDS ETC. IS TOTALLY NOT GERMANE TO THE SPECIFIC PROVISION CONTAINED IN S. 32(1)(IIA). IT CANNOT ALSO BE SAID THAT SETTING UP OF A WINDMILL WILL NOT FALL WITHIN THE E XPRESSION SETTING UP OF A NEW MACHINERY OR PLANT. THERE IS NO ERROR IN THE C ONCLUSION OF THE TRIBUNAL. THE HONBLE MADRAS HIGH COURT IN CASE OF CIT VS. T EXMO PRECISION CASTINGS (SUPRA) HELD AS UNDER: FOR THE APPLICATION OF S. 32(1)(IIA) WHAT IS REQUI RED TO BE SATISFIED IS THAT THE SETTING UP OF A NEW MACHINERY OR PLANT SHOULD H AVE BEEN ACQUIRED AND INSTALLED AFTER 31 ST MARCH, 2002 BY AN ASSESSEE, WHO WAS ALREADY ENGAGED IN THE BUSINESS OF MANUFACTURE OR PRODUCTIO N OF ANY ARTICLE OR THING AND THERE IS NO REQUIREMENT THAT THE SETTING UP OF A NEW MACHINERY OR PLANT SHOULD HAVE ANY OPERATIONAL CONNECTIVITY T O THE ARTICLE OR THING THAT WAS ALREADY BEING MANUFACTURED BY THE ASSESSEE. ITA NO. 474/AHD/2011 & C.O. NO. 64/AHD/2011 A.Y. 2007-08 ACIT VS. M/S AHMADABAD STRIPS PVT. LTD . PAGE 5 BY RESPECTFULLY FOLLOWING THE DECISIONS OF HONBLE MADRAS HIGH COURT, WE DISMISS THE APPEAL OF THE REVENUE AND ALLOW THE C.O . OF THE ASSESSEE. 6. IN THE RESULT, REVENUES APPEAL IS DISMISSED AN D ASSESSEES C.O. IS ALLOWED. THESE ORDERS PRONOUNCED IN OPEN COURT ON 29.04.2014 SD/- SD/- ( KUL BHARAT ) (T.R. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER TRUE COPY S.K.SINHA !- !- !- !- & && & ./ ./ ./ ./ 0!/, 0!/, 0!/, 0!/, / COPY OF ORDER FORWARDED TO:- 1. % / REVENUE 2. ! / ASSESSEE 3. 4 / CONCERNED CIT 4. 4- / CIT (A) 5. /8 .( , , / DR, ITAT, AHMEDABAD 6. 8:; <= / GUARD FILE. BY ORDER/ !- !, >/ % , $